need problem 2 and problem 3 solved in the attachment inexcel using all formuals and cell references.
iamnickokneed problem 2 and problem 3 solved in the attachment inexcel using all formuals and cell references.
Below is what professor asked us to use the procedure on problem 2.
The objective of Problem 2 is to see at which set of probabilities the expected values are equal. Remember that in a two state problem the probability of one event is the complement of the other. So, if P(Boom) = 0.1, then P(Steady) = 1 - 0.1 = 0.9. The book shows you a brute force method for sensitivity analysis, but there is an easier way to solve this problem using Goal Seek. Set up the problem like this:
Decision | Boom | Steady |
IBN | $6,000.00 | $1,500.00 |
Microsopht | $100,000.00 | $40,000.00 |
P(Boom) | 0.1 | |
E(IBN) | $1,950.00 | |
E(MS) | $26,000.00 | |
Difference | $27,950.00 |
Then, use Goal Seek to find the probability of P(Boom) that makes the difference zero and the Expected Value of the two alternatives (at which they are tied).
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